Buying a new business involves many risks that you need to evaluate, whereas buying an established one can be a great opportunity because you don’t have to go through the lengthy procedure of starting from scratch.
Whether you buy a new business or an existing one, the most important thing is to make the right choice based on your preferences. This involves a number of factors and steps that you need to consider. There are several businesses out there for sale when it comes to buying a business. However, some of them are lemons, so you need to set agendas of the deal before planning a meeting with the seller!
In order to avoid getting trapped into a bad deal, you need to thoroughly evaluate the business beforehand that you’re going to purchase. There are some crucial steps that you need to follow in order to buy the right business. Here are they:
1. Set Your Priorities
First of all, the most essential step that you need to take when buying a business is to decide the industry of your choice. For example, if you’re interested in clothing and apparel, you should focus on opting for the garments industry. If you have a passion for cars, you should go for the automobile industry. There’s no use of a business you’re not passionate about. Make sure that the business you choose suits your background, abilities, experience, skills, and interest.
2. Consider The Size
Once you have decided about the industry of your choice, you have to settle on the size of the business you’re about to buy. There are two primary concerns here: first, the ‘size’ of the company that your management skills can handle – the number of employees, operating units, and sales volume; and second, the ‘size’ of the capital you have with you. You should have a thorough understanding of debt, investment capital, and potential seller financing before going any further.
3. Start Your Hunt
Next, start your search for a company for sale in the respective industry and the size of your business. Look around; ask your contacts and friends to recommend a qualified and experienced business broker for you. You can also search over the web and take help from various business websites. You will get access to a number of companies for sale on the Internet in your respective area of business.
4. Meet The Sellers
After you have found a company that is appropriate for your corresponding business and industry, you must decide to meet the sellers of that respective company as soon as you can. But first, you should know what you have to and what you don’t have to say. Practice with a professional first; conduct a role play session with him and get aware of the dos and don’ts for the meeting.
5. Make Your Offer
Now that you have met the seller, it’s time that you make an offer and start your negotiation with him. You negotiation goes somewhat like this: you make an offer first, and then the seller makes a counter-offer. Both the parties will go through a negotiating process and will come to a conclusion at some point or the other.
6. Draw Up A Purchase/Sale Agreement
Once both the parties have reached a point where they both agree to the terms and condition, there comes the need to draw up a purchase/sale contract. You need to hire a lawyer to make the agreement so that each and every detail of the contract gets mentioned on it clearly.
Buying a business is indeed a challenging task but you shouldn’t be afraid to perform it because if performed effectively, it can truly turn out to be your dream-come-true. The only key is to follow the above-mentioned steps carefully and you will surely be successful in purchasing the business of your choice!
Scarlett Erin works as a Content Managing Editor at Assignment Star blog. She also works as part of the team of assignment writers uk. She contributes articles relating to finance, law, insurance and other topics related to businesses. Other than work, Scarlett enjoys reading fiction and loves traveling.